As Putin’s Russia invades Ukraine, governments worldwide have been imposing sanctions and seizing Russian oligarch assets.
The U.S., U.K., and Europe have announced that the elites who aided Putin’s invasion of Ukraine and gained riches at the expense of the Russian people will have their properties blocked from use and their assets frozen.
Seizing their super yachts, private jets, and mansions is complicated, though.
Countries enforcing sanctions face legal battles from oligarchs who are well-versed in protecting their assets.
Here’s what authorities have seized so far, and what happens next.
Oligarch yachts and compounds
Many high-profile yachts have been seized since Putin’s invasion of Ukraine began two weeks ago.
Alexei Mordashov’s “Lady M,” a 213-foot yacht, was impounded in Imperia, Italy.
Gennady Timchenko’s “Lena,” a 132-foot superyacht was also seized in San Remo, Italy.
Igor Sechin’s 280-foot yacht “Amore Vero” was impounded in La Ciotat, a port in France.
Alisher Usmanov’s $18 million resort compound was impounded in Sardinia. He also owns “Dilbar,” a superyacht which reportedly cost more than $648 million, according to a recent Fortune story.
While several media outlets reported that the German authorities had impounded the yacht, a spokeswoman for Hamburg’s state economy ministry clarified that this was not true because ownership of the yacht had not been established. The yacht is registered to a company in Malta, and is flagged in the Cayman Islands.
Many yachts belonging to the ultra-wealthy are already anchored in the Mediterranean and Caribbean. More than a dozen are on their way to remote ports in small nations like Montenegro and the Maldives, beyond the reach of Western sanctions. Three are anchored in Dubai, and another three have gone dark.
Graceful, a superyacht that many believe belongs to Putin, moved from a repair yard in Hamburg to Kaliningrad, a Russian Baltic port, two weeks before the invasion.
Italy has seized $156 million in luxury yachts and villas since Friday.
In response to the invasion of Ukraine, a jet linked to Russian billionaire Eugene Shvidler was impounded in the U.K., according to Politico. Reports linked to the plane matched Shvidler’s flight records, according to Business Insider.
The jet is registered to Global Jet Luxembourg, a company in Luxembourg. Shvidler is close friends with oligarch billionaire Roman Abramovich, and has a net worth of $1.7 billion. He made his fortune in oil and has close ties to the Kremlin.
This is the first jet seizure since the U.K. passed a rule which allows them to detain Russian aircraft entering the territory and bans exports of space-related goods to Russia. This ban includes any aircraft, operated, chartered, owned, or connected with Russia and certain individuals.
The new measure makes it a criminal offense for Russian aircrafts to fly or land in the U.K.,according to CNBC. According to British Foreign Minister Lizz Truss, they are also intended to put economic pressure on Putin and his allies.
Online tools like the Russian Oligarch Jets tracking project and the AvDelphi website are keeping tabs on the aircrafts in real-time.
What happens next?
Enforcing strong sanctions against Russia presents a legal challenge for countries, even after they seize assets.
Sanctions don’t just allow countries to take full ownership of Russian oligarchs’ planes, homes, and boats. While the assets are frozen, they still technically belong to the oligarch. A freeze simply means that the owner can’t sell or transfer ownership.
Enforcing sanctions could lead to off-court battles that could last years. Each country has its own sets of laws, and the latest round of sanctions pose unprecedented and unanswered legal questions, according to Benjamin Maltby, an expert in yacht and luxury asset law at Keystone Law.
Prosecutors also require evidence that the asset was directly involved in a crime, which can be difficult to pin down as many Russian oligarchs operate in secrecy, taking steps to cover their tracks.
Oligarchs are challenging targets because they are so well-versed in finding loopholes, such as off-shore accounts in non-sanctioned countries, to protect their assets.
If the state manages to take ownership of the asset and decides to sell it, proceeds typically go to law enforcement.
Costly to maintain
Mordashov and Sechin will continue to have ownership of their yachts, but they won’t be able to sail away because authorities have tied them to docks.
Authorities now face the challenge of expensive costs associated with the yachts, jets, and compounds.
Oligarchs are technically responsible for maintaining their property, even though the assets have been frozen and they can’t use them. But, they could refuse to pay, rendering their yachts and jets unusable and in disrepair.
Authorities aren’t allowed to exchange money with sanctioned individuals, meaning it could be difficult to get them to get Russian oligarchs to pay for necessary maintenance.
What comes next?
President Joe Biden has joined forces with his European allies, warning oligarchs in his State of the Union address that the U.S. is coming for their “ill-begotten gains.”
In Congress, a bi-partisan bill called “Yachts for Ukraine” would allow authorities to seize properties owned by Russian elites in the U.S. valued at more than $5 million. The government would then be able to sell the assets and send the cash to Ukraine.
In the U.K., Parliament members are considering launching new legislation to more easily freeze the assets of oligarchs.
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